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Full text of "Annual Evaluation Report Fiscal Year 1984"

504-2

II.    RESPONSE TO GEPA 417(a)

A.  Goals and Objectives

During FY 1984, the Department's principal operating objectives for this
program were:

o to implement recent legislative amendments which authorized the Secretary
to police the amount of tax-exempt obligations issued for student loan
purposes.

o to accelerate collections on defaulted loans, especially by private
collection agencies under contract with the Secretary.

o to accelerate compliance actions involving fraud, waste, and abuse; and
accelerate the prosecution of defaulters through the Justice Department.

B.  Progress and Accomplishments

o ED implemented all new statutory provisions and reduced tax-exempt bond
volume raised for student loan purposes.

o It increased the collection activities of private agencies in FY 1984.

o It resolved all outstanding audits during FY 1984 and sent defaulted
accounts meeting certain criteria to the Department of Justice for
prosecution.

C.  Costs, Benefits and Effectiveness

Student Participation: ED estimates that about 28 percent of all eligible
students participatein the Guaranteed Student Loan Program. For full-time
freshmen undergraduates for the fall of 1983, the participation rate was
23.4 percent. (See Table 2 for more detail.) Participation rates and aver-
age loan amounts are sensitive primarily to the cost of education. For the
lowest cost category (less than $3,000), the average participation rate in
1983 was 17.5 percent. For the highest cost category (more than $6,000),
44.2 percent of all students borrowed under this program. Although a smaller
percentage of students in the lowest-cost schools participated, student
loans paid for a larger percentage of their total costs. For example,
in FY 1983, loans covered 45.5 percent of total cost in the least expensive
category of institution, but paid for only 23.7 percent of total cost in the
highest cost category. However, the average loan at the highest cost schools
was about 50 percent larger than in the lowest cost schools. Because of
the annual borrowing limit, ($2,500) students attending progressively more
expensive institutions find that guaranteed loans will meet a smaller
percentage of their total costs. (E.I) Data on the PLUS/AuxlHary program
are not yet available.s those borrowing under regular GSLP provisions. An